Walmart’s latest earnings offer peek inside consumers’ wallets

The American consumer appears to have entered the “Do I really need this?” portion of the economic cycle.

Walmart last week reported its slowest comparable-sales growth in six years in the US, as high living costs and a softer job market caused shoppers to become more selective about where their dollars went.

US comparable sales, which track stores and digital channels operating for at least 12 months, rose just 2.6% last quarter.

It’s a major shift from recent years

Walmart’s Q2 US comparable sales rose 6.4% in 2023, 4.2% in 2024, and 4.6% last year. This quarter also missed analysts’ expectations of 3.8%.

But shoppers haven’t disappeared. Online sales are booming, with Walmart’s US e-commerce revenue jumping 24% last quarter while store-fulfilled delivery grew 40%. The company’s advertising business is also becoming a bigger growth engine, with Walmart Connect’s US sales rising 43%.

• The retailer says it continued gaining market share across income groups, with particularly strong gains among households earning $100,000+/year.
• Lower-income shoppers are still spending, but higher gas prices have caused some to make choices between necessities, CFO John David Rainey said.

Why it’s a big deal: Walmart’s earnings are closely watched for clues about the health of the US consumer, given the retailer’s enormous reach across American households. We’ll have more data later in the week, with the monthly Conference Board’s Consumer Confidence Index (today) and the University of Michigan’s August Consumer Sentiment Index (Friday).